scholarly journals Emerging policies and the effectiveness of corporate governance mechanisms on earning quality

2020 ◽  
Vol 9 (3) ◽  
pp. 157-164
Author(s):  
Mohammed Mahdi Obaid ◽  
Muneer Rajab Amrah
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Gulf Cooperation Council ◽  
Independent Directors ◽  
Board Independence ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Earning Quality ◽  
The Relationship

Current study review extant empirical researches on the relationship between CG and EQ. However, the scope of the reviewed studies was shown to vary, most studies on CG and EQ are specific in focus, with different studies focusing on specific aspects or measures of CG. This study evaluates the role of emerging policies and the effectiveness of corporate governance mechanisms on earning quality within a conceptual framework for the Gulf cooperation council. This study concludes that the majority of companies with big board size, higher board independence, and more frequent meetings have improved EQ. Also, the result indicates companies with big audit committee size, a larger number of independent directors, more audit committee meetings and more experts tend to have an increase in EQ. Finally, this review emerged as a framework suitable for assessing the level of EQ disclosed and the relationship between CG and EQ base on GCC policies.

The effect of characteristics of audit committee and board on corporate profitability in Iran

2018 ◽  
Vol 34 (1) ◽  
pp. 71-88 ◽  
Author(s):  
Mahdi Salehi ◽  
Mohammad Tahervafaei ◽  
Hossein Tarighi
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Emerging Market ◽  
Board Independence ◽  
Outside Directors ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms

Purpose The purpose of this paper is to evaluate the relationship between the characteristics of the audit committee and the board and profitability among the companies listed on the Tehran Stock Exchange (TSE) in Iran. Design/methodology/approach In this study, the companies listed on the TSE during the period from 2010 to 2015 are investigated. The Linear panel regression method is employed for this purpose. The independent variables of the study are composed of some corporate governance mechanisms including audit committee size, audit committee expertise, board size, board independence, chief executive officer (CEO) duality, and institutional ownership. Findings In spite of the fact that there does not exist any significant association between audit committee size and corporate financial performance, the results indicate that there is a positive and significant relationship between audit committee financial expertise and profitability. The authors found that the number of board members cannot affect corporate performance; moreover, duality of CEO role in Iranian companies does not affect company performance. However, the outcomes showed a positive and significant association between the proportion of outside directors on the board (board independence) and profitability at 99 percent confidence level. This implies that the role of non-executive directors in Iran is inconsistent with the stewardship theory. This is due to the fact that independent directors understand the status of business and market better than the board’s executive members. Finally, the results indicated that there is no significant association between institutional owners and Iranian companies’ performance. Practical implications The findings of this study will reveal more than ever the role of corporate governance mechanisms for society and users of financial statements because as tools on the CEO actions, they always have to pay attention to the implementation of corporate principles in the economic entity’ operation. Originality/value This is one of the most important studies that simultaneously examine the impacts of characteristics of the audit committee and the board on profitability in an emerging market, and the results of the study may give strength to Iranian as well other developing countries.

Determining factors of key audit matter disclosure in Thailand

2020 ◽  
Vol 32 (4) ◽  
pp. 563-584
Author(s):  
Suneerat Wuttichindanon ◽  
Panya Issarawornrawanich
Keyword(s):  
Corporate Governance ◽  
Southeast Asia ◽  
Audit Committee ◽  
Independent Directors ◽  
Governance Mechanisms ◽  
Content Type ◽  
Big 4 ◽  
Corporate Governance Mechanisms ◽  
Determining Factors

Purpose In Southeast Asia, auditors play a crucial role in the quality of financial reports. With the introduction of a new format of auditors’ report that requires disclosure of key audit matters (KAM), the disclosure practice of auditors is, thus, of great interest. Specifically, this study aims to investigate the factors that auditors take into consideration when issuing KAMs. Design/methodology/approach The research design is quantitative, with a focus on the number of KAM disclosures issued by auditors. As existing studies rely on the number of KAM disclosures in the analysis, this current research, thus, uses the quantity of KAM disclosures for comparison purposes. The analysis relies on secondary data and multiple regression analysis is used to establish the association between the number of KAM disclosures and three groups of determining factors, namely, auditor characteristics, corporate governance mechanisms and firm characteristics. Findings The significant determining factors of KAM disclosure include auditor’s litigation risk, firm complexity, profitability and industry type. Firms using a Big 4 audit firm, firms with many subsidiaries and firms in the technology, property and construction and finance industries have higher numbers of KAMs, while highly profitable firms issue lower numbers of KAMs. As for corporate governance mechanisms, the number of KAMs is significantly positively correlated with the number of independent directors (p < 0.10). Originality/value This research includes key corporate governance parties in the examination, including external auditors, independent directors and audit committees. The finding affirms the influence of Big 4 on KAM disclosure in Southeast Asia, while their roles are not significant in Western samples. The result also unearths the monitoring role of independent directors in KAM disclosure. The role of the audit committee in KAM disclosure is insignificant in Thai samples, while the committee role is statistically significant in the Western samples. Variations in the findings between this study and previous research could be attributed to differences in institutional settings between both regions.

scholarly journals Corporate Governance Mechanisms and Firm Performance in Saudi Arabia

2021 ◽  
Vol 12 (3) ◽  
pp. 446
Author(s):  
Helmi A. Boshnak
Keyword(s):  
Corporate Governance ◽  
Saudi Arabia ◽  
Firm Performance ◽  
Audit Committee ◽  
Audit Committees ◽  
Independent Directors ◽  
Governance Mechanisms ◽  
Concentrated Ownership ◽  
Corporate Governance Mechanisms

This paper examines the impact of corporate governance mechanisms including board size, independence, and meeting frequency, audit committee size and meeting frequency, CEO duality and ownership concentration on the operational, financial and market performance of Saudi listed firms using a contingent theoretical-based framework drawing on agency theory, stewardship theory and resource dependence theory. This study examines 210 listed Saudi Stock Exchange firms over the timeframe 2017 to 2019. The paper applies both a manual content and regression analysis approach. The results show that firm performance deteriorates with board size and independence, audit committee and meeting frequency, and the presence of CEO role duality, while performance improves with board meeting frequency and ownership concentration. Thus, Saudi firms should respond by maintaining smaller boards and more frequent meetings, keeping the Chair and CEO roles separate, and maintaining smaller audit committees with more focused meetings. Further, the appointment of independent directors only makes a meaningful contribution to firm performance where they are truly independent. Finally, more concentrated ownership tends to encourage better firm performance due to the regime of monitoring and discipline concomitant with more powerful shareholders. The implications of this paper are threefold. First, the implementation by Saudi Arabia of the latest corporate governance regulations and IFRS adoption almost certainly impact firm performance markedly. Second, corporate governance regulations should recognize the role of more frequent board meetings and more concentrated ownership in enhancing corporate performance. Third, stakeholders should apply pressure on investee firms to maintain smaller boards, engage genuinely independent directors, separate the role of Chairman and CEO, and maintain smaller audit committees with fewer and more effective meetings. The results should help corporate boards when deciding on the best corporate governance mechanisms to enhance firm performance. Further, the study should provide policy makers with a better understanding of the corporate governance structures required to promote better performance by drawing on existing theories and the empirical modelling, in an emerging economy setting such as Saudi Arabia, a new and broader data set, thereby informing better future policy and protecting shareholders’ interests.

scholarly journals The effect of financial and non-financial performance on investors’ reactions: The role of corporate governance mechanisms as moderating

2022 ◽  
Vol 10 (8) ◽  
pp. 47-56
Author(s):  
Intadaviqotul Minakh ◽  
Erwin Saraswati ◽  
Abdul Ghofar
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Boards Of Directors ◽  
Audit Committee ◽  
Institutional Ownership ◽  
Audit Committees ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
The Relationship

The purpose of this study is to examine the effect of financial and non-financial performance on investor reactions and the role of corporate governance mechanisms as moderating. The analysis technique used is the moderated regression analysis (MRA). The research population is manufacturing sector companies listed on the Indonesia Stock Exchange (IDX). Based on the purposive sampling method, 78 companies were selected as the samples (390 firm-year observations). The results of this study provide empirical evidence that the existence of financial and non-financial performance in a company can increase investor reactions. Institutional ownership plays a role in the relationship between financial performance and investor reactions. Meanwhile, independent commissioners, boards of directors, and audit committees have no role in the relationship between financial performance and investor reactions. And independent commissioners and institutional ownership can moderate the influence of non-financial performance on investor reactions. Meanwhile, the board of directors and audit committee cannot moderate the influence of non-financial performance on investor reactions.

The Impact of Corporate Governance Mechanisms on the Relationship Between Cash Holdings and Audit Fees in Egyptian Listed Companies

2019 ◽  
Vol 9 (2) ◽  
pp. 314
Author(s):  
Eman Abdel-Wanis
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Panel Data Analysis ◽  
Cash Holdings ◽  
Audit Fees ◽  
Governance Mechanisms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
The Relationship

This paper explores the impact of corporate governance mechanisms on the nature of the relationship between cash holdings and audit fees, which helps provide an opportunity to identify whether these mechanisms enable to mitigate agency problems, and thus lower audit fees through a sample of 78 Egyptian listed firms in EGX 100 during the period 2014-2016 using panel data analysis. Results indicated that cash holding increases auditing fees. The board characteristics affect negatively on the relationship between cash holdings and audit fees. Also, ownership structure affects negatively on the relationship between cash holdings and audit fees. As well audit committee affects negatively on the relationship between cash holdings and audit fees. There results support the view that corporate governance mitigate on the relationship between cash holdings and audit fees.

scholarly journals The Relationship between Corporate Governance Mechanisms and Going Concern Evaluation: Evidence from Firms Listed on Amman Stock Exchange

2014 ◽  
Vol 4 (4) ◽  
pp. 100
Author(s):  
Bilal Nayef Zureigat ◽  
Faudziah Hanim Fadzil ◽  
Syed Soffian Syed Ismail
Keyword(s):  
Corporate Governance ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Institutional Ownership ◽  
Board Independence ◽  
Board Meeting ◽  
Governance Mechanisms ◽  
Going Concern ◽  
Corporate Governance Mechanisms ◽  
The Relationship

This study aims to examine the relationship between corporate governance mechanisms (representative by each of managerial, institutional ownership, board independence and board meeting) and going concern evaluation among Jordanian listed firms. Through using multiple regression analysis, the results of this study illustrates that there is a positive relationship between managerial ownership, board independence and board meeting and going-concern evaluation, while a negative relationship is found with institutional ownership. There are four main hypotheses, two of them which are managerial and institutional ownership are accepted, while board independence and board meeting are not supported. This study shed more light on the importance of complying with the requirements of governance code and instructions by the companies and the need to impose fines or sanctions on non-compliant companies. The results of this study contribute to the creditors’ interest to be more alert to companies which may possess characteristics that contribute in manipulation of future companies.

Ownership structure and audit committee effectiveness: evidence from top GCC capitalized firms

2019 ◽  
Vol 12 (3) ◽  
pp. 407-425 ◽  
Author(s):  
Mahfoudh Abdulkarem Al-Musali ◽  
Mohammed Helmi Qeshta ◽  
Mohamed Ali Al-Attafi ◽  
Abood Mohammad Al-Ebel
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Ordinary Least Squares ◽  
Annual Reports ◽  
Least Squares Regression ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
The Relationship ◽  
Ownership Types

PurposeThe purpose of this study is to report on the level of audit committee (AC) effectiveness on the top capitalized firms in GCC countries and to empirically investigate the hypothesized influence of ownership types on the level of AC effectiveness.Design/methodology/approachThe empirical data were drawn from annual reports of 119 top listed firms in Gulf Co-operation Council (GCC) nations at the end of 2011. Ordinary least squares regression analysis was constructed to examine the relationships between ownership types and the level of AC effectiveness.FindingsThe findings revealed that family, government and institutional ownership, in addition to board independence, all have significant positive association with AC effectiveness, and they serve as a complement to AC effectiveness.Research limitations/implicationsThe findings of the study are important for policy makers and regulators as they could use them to understand the relationship between different corporate governance mechanisms and formulating best strategies that would help them to improve and adopt an optimal governance system constituted from interacting governance mechanisms.Originality/valueThis study is one of few that have examined the interaction between different corporate governance mechanisms. It provides insights about the relationship between AC effectiveness and other governance mechanisms in the GCC context.

Audit committee versus other governance mechanisms and the effect of investment opportunities: evidence from Palestine

2020 ◽  
Vol 20 (3) ◽  
pp. 527-544 ◽  
Author(s):  
Islam Abdeljawad ◽  
Ghassan A.I. Oweidat ◽  
Norman Mohd Saleh
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Valuable Insight ◽  
Governance Mechanisms ◽  
Content Type ◽  
Corporate Governance Mechanisms ◽  
Investment Opportunities ◽  
The Relationship

Purpose This paper aims to explore how the presence of an audit committee is associated with other corporate governance mechanisms, i.e. board structure, ownership structure and quality of external audit. The present study evaluated whether the presence of the audit committee complements or substitutes other governance mechanisms in Palestinian companies. Moreover, the effect of investment opportunities on the relationship between the formation of the audit committee and the quality of the auditor was addressed. Design/methodology/approach The association between the formation of the audit committee and other governance variables was modelled as a binary logistic model. The sample comprising 44 firms listed on Palestine exchange for the period between 2013 and 2017, amounting to 220 firm-year observations. Findings Based on the investigation, the results have indicated that board independence, the distinction between the chairman and chief executive officer function, ownership concentration and audit quality enhance the chance of audit committee formation, implying complementary effect. Contrastingly, board size and board ownership serve as a substitute to audit committee formation. It has also been found that investment opportunities act as an effective moderating factor that strengthens the relationship between audit quality and the formation of the audit committee. Originality/value The study provides valuable insight into the interaction between multiple corporate governance mechanisms within the economy of Palestine where the external uncertainty is high and investment opportunities are constrained by the decisions of the occupying authority. The findings may help regulators and policymakers in Palestine alongside those of other countries with similar environmental features to revise and update their corporate governance codes to ensure that the best control can be achieved, subsequently attracting more foreign and domestic investments.

scholarly journals Corporate governance mechanisms and audit report lag moderated by audit complexity

2019 ◽  
Vol 8 (6) ◽  
pp. 256-261
Author(s):  
Wa Ode Irma Sari ◽  
Bambang Subroto ◽  
Abdul Ghofar
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Financial Statements ◽  
Manufacturing Companies ◽  
Audit Report ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Negative Effect ◽  
The Relationship

This study aims to verify the correlation between corporate governance mechanisms, reflected independent commissioners, audit committee and audit tenure to audit report lag, and the audit complexity has able to moderate the relationship between corporate governance mechanisms to audit report lag. This study uses a population of manufacturing companies that publish their financial statements on the Indonesian Stock Exchange in 2015-2017. The samples are selected with a purposive sampling method. There is 100 manufacturing company selected as the sample for the period of 2015-2017. This study was tested by using the Moderate Regression Analysis test. The results of this study indicate that the audit committee and audit tenure have a negative effect on audit report lag, but the independent commissioner has an insignificant effect on audit report lag. Audit complexity is proven to increase audit report lag as an increase audit committee. This research provides the capital market authority (OJK) to issue policies and strict sanctions, thus encouraging companies to publish audited financial statements more time.

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